Conventionally, a key component of disaster recovery is insurance. Catastrophe insurance can provide developing countries with the financial means to cope and recover from a loss when resources are scarce. Unfortunately, insurance may be too expensive or unavailable for many developing and catastrophe prone regions. With proper planning, economies and countries can be prepared for disasters before they happen.
Charitable organizations (charities) lend help to countries at the time of disasters, but if a mechanism was setup where the funding for such a catastrophic event was already in place, then it would remove much of the strain of soliciting funds and also provide leverage to the charities in sourcing funds.
Patent application US 2007/0226154 discloses a method for benefiting charitable organizations integrating annuities, mortality contingent bonds or other mortality-hedging derivatives. According to US 2007/0226154, donors select benefiting charities. At least one lending entity issues a mortality contingent bond loan or a derivative loan to a qualified tax-exempt charitable organization that then uses funds from the mortality contingent bond loan or the derivative loan to purchase annuities from at least one commercial life insurance company. The donors are named as the annuitants of the annuities. The qualified tax-exempt charitable organization will then use funds from the annuity payments to amortize the mortality contingent bond loan or the derivative loan and will also donate a portion of the annuity payments to the benefiting charities selected by the donors.